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An AI-generated consulting report produced by Deloitte Australia using an Azure OpenAI agent contained fabricated court citations and invented quotes attributed to nonexistent legal proceedings, forcing the firm to return a portion of a $290,000 fee. Risk and Insurance traced the failure to the absence of a two-person verification requirement for legal and citation claims and no structured human review step for AI-generated numerical or factual assertions. Good.Lab's compilation of major responsible AI failures separately named the incident as one of the most consequential enterprise AI failures on record, citing the same root causes: no hallucination-detection check and no mandatory human verification before delivery.
